New Jersey Housing Market

Learn more about the housing market in New Jersey

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New Jersey Housing Market Trends & Forecast

July 5, 2024

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Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.  

New Jersey Housing Market Overview 

New Jersey has a number of unique draws for prospective home buyers. Some may head towards the shore for a beach house, while others flock to the northern or southern points for easy access to New York or Philadelphia, respectively. Newark and Jersey City may appeal to the younger crowd who enjoy a booming nightlife and restaurant scene.  

However, before moving to New Jersey, it’s important to take certain aspects of the New Jersey housing market into consideration.  

Although the New Jersey housing market has continued to grow as evidenced by its 12.4% increase in home prices this year, other factors like high property taxes and the nation’s increasing inflation rate have discouraged would-be homebuyers from beginning the process. 

Inventory remains an issue in the housing market New Jersey retains, as well as in many U.S. states, since mortgage rates discourage current residents from listing their homes for fear that their new mortgage rate will be higher than what they currently pay.  

Despite these issues, New Jersey’s wide variety of locales appeal to many different demographics and continue to bring in new residents each year. From this time in 2023, the housing market New Jersey saw the largest influx of new residents among the 11 states that lost population last year. The state brought in over 30,000 incoming residents during this time period, trying to return to pre-pandemic levels.  

New Jersey Housing Market Trends 

To understand the New Jersey real estate market, it’s important to keep up with trends. Let’s look at some key ones in New Jersey: 

Note: These statistics are based on Redfin’s monthly housing data from April 2024. 

Median Home Price 

The median home price in New Jersey is $510,400 as of April 2024. This marks a 12.4% increase over last year, which is up there with some of the biggest jumps in the nation. In May of 2024, the national median home price was $438,601—New Jersey homes clearly hurdle right over this average. 

Number of Homes Sold in April 2024 

In April of this year, there were 6,944 homes sold in New Jersey, which is an increase of 3.90% since last April. It’s also important to keep in mind that this number might be inflated compared to other months since nationally speaking, sales usually peak during the spring and summer months and slow considerably in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM) 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage. 

The current median days-on-market (DOM) in New Jersey is 32 days, down five days year-over-year. When the days on market rate decreases, it signifies a growing seller’s market. When there are more buyers in the market than available or affordable housing, properties tend not to stay on the market very long. With more inventory or less buyers, the DOM would most likely increase.  

New Supply Statistics 

New Jersey suffers from low supply, as does much of the nation. New Jersey currently has two months of housing supply.  

Months of housing supply refers to how many months it would take for all the current for-sale homes to be bought given how fast homes are selling per month in that region. Anywhere from four to five months is average, while six months would signify an especially stable market.  

Since New Jersey only has two months of housing supply, it’s clear that sellers are hesitant to sell their homes. Some of this hesitancy could come from today’s high mortgage rates. If sellers leave their current homes, there is a high likelihood that they’d be forced to pay a higher rate in a new home. 

Additionally, for every 1,000 New Jersey residents, there are four new residential construction permits issued. In the United States, New Jersey, New York, and Pennsylvania ranked the lowest for new construction permits in 2022, though New York has the number two most populated urban area in the nation.  

This low new construction rate further contributes to the supply issue in the New Jersey area. If inventory remains dismal, the prices may continue to rise as demand does.  

Property Tax Rate 

New Jersey’s property tax rate is 2.23%, the highest in the nation. If someone were to purchase a home worth $384,700, they would spend over $8,500 a year in property taxes alone. Many residents have mentioned property taxes as the most important issue facing New Jersey residents right now, and the second highest issue stated was the cost of living. In a Monmouth University Poll, 48% of respondents said they’d like to leave the state due to these issues. 

 It’s important to point out that property taxes vary widely depending on the specific county of New Jersey and the value of the home, so this average rate may or may not be indicative of your situation.  

Foreclosure Rate in Q1 of 2024 

For the first quarter of 2024, 1 in every 919 homes in New Jersey experienced a foreclosure filing. This makes New Jersey the state with the second most foreclosures in the nation, behind only Delaware.  

Atlantic City, New Jersey saw some of the highest urban foreclosure rates at one in every 628 housing units. ATTOM notes that New Jersey is among the states with the highest foreclosure vulnerability due to increasingly high interest rates and home ownership costs. The most at-risk counties were categorized this way due to the percentage of local wages required to pay for the expenses involved in home ownership, alongside unemployment rates and the portion of mortgage balances that exceeded estimated property values.  

Hottest Local Markets in New Jersey

  1. Newark

Newark, NJ is the largest city in New Jersey and a hub for transportation to the major cities on the East Coast. Newark’s unemployment rate has steadily been lessening since this January, settling at 4.2 for April of 2024. While this unemployment percentage is higher than the nation’s average of 4%, a lowering unemployment rate is a good sign that the housing market in that area is going to benefit from an economy with more employees. 

In fact, Newark saw home prices that were up 17.7% higher than last year, selling for an average price of around $559,000. Last year, Newark sold 127 homes in May, and this year the number of homes sold is up to 131.  

Redfin characterizes the Newark market as somewhat competitive—some homes get multiple offers and can go pending as quickly as 21 days. Most, however, go pending around 53 days, which is relatively slower than the nation’s average.  

  1. Edgewater

One of the hottest housing markets in New Jersey is Edgewater. Edgewater, NJ, is on the Hudson River and boasts lovely water views. There are also many popular restaurants and historic areas to explore.  

The housing market in New Jersey’s Edgewater is also something to brag about. While there were only 24 homes sold in May of this year, the average sale price for a home has skyrocketed over the past 12 months, reaching the highest price since 2021 of $1.2M.  

If you can afford a home in this area, you will benefit from a market that is not very competitive, most likely due to the heightened sale prices. Homes typically sell below list price and can go pending around 87 days.  

That said, this area is only viable for some of the wealthiest New Jersey residents. If you are looking to sell your home in this city, it’s rare that you will get to choose between multiple offers and you may be looking at a long road ahead for selling your property.  

  1. Trenton

Trenton, NJ is the capital of the state and the former capital of the United States. The area has a lower home ownership cost compared to other areas of New Jersey—the median sale price for homes is around $225,000 which is much lower than the national median of $438,601 and even lower than the state’s median of $533,700 

Although home prices aren’t as high in this area as is typical for NJ, the median sale price has increased over 35% since last year. Some homes get multiple offers and can go pending anywhere from 18-43 days.  

Economic Factors Impacting the New Jersey Housing Market 

A holistic view of the housing market in New Jersey requires a basic understanding of the main economic drivers affecting the market. Let’s look at a few critical ones below: 

Mortgage Rates 

The current interest rates in New Jersey are 7.10% for a 30-year fixed mortgage. Comparatively, the average interest rate in the United States is 6.86%. 

Mortgage rates are expected to remain well above historical lows, and with rising home prices and mortgage rates as they currently are, it can be difficult for New Jersey residents to afford a home that is below 30% of their monthly income. Higher interest rates deter borrowing and discourage those who already own homes from putting their homes on the market. Many homeowners across the nation report feeling “tied” to their current homes, as it is unlikely they will secure a mortgage rate as low as their current one if they move to a new property. Prospective buyers in New Jersey would be wise to monitor mortgage rates in the coming months for a better understanding of how they impact the housing market. 

Inflation and Cost of Living 

Mortgage rates relate directly to inflation, another massive contributing factor to the affordability of housing and the status of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in New Jersey. This means fewer people can truly afford to limit housing costs to less than the recommended 30% of their monthly income.  

Population Changes and Demographics 

The current population of New Jersey is 9.262 million, continuing its steady incline since even before 2000. The employment rate for this population is 62.7%, higher than the February 2024 United States average of 60.3% 

Housing Market in New Jersey Forecast 

Extensive demand mixed with a small growth in supply could signal some potential opportunities coming soon in the market.  

Most experts believe New Jersey will see a continued increase in housing prices, though. Thus, the outlook points to a sellers’ market for the foreseeable future. 

Likelihood of New Jersey Housing Market Crash  

A housing market crashes typically due to a rapid decline in home value. As long as demand exceeds the supply in the market, a housing market crash is relatively unlikely.  

New Jersey has low supply that is only increasing around 0.5% year-to-year. Although New Jersey’s incoming population rate is also slowing, such a low supply of homes will maintain this low supply, high demand dynamic for the foreseeable future.  

New Jersey’s job market is also improving year-over-year, signaling a stable workforce to upkeep demand and the economy in this area.  

Forecast for The U.S. Housing Market 

Now that we’ve looked at New Jersey’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States’s current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.  

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get. 

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth. 

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.  

New Jersey Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.  

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year. 

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

This short summary leads directly into New Jersey’s current rental market, with key trends from Zillow:

New Jersey Rental Market Key Trends 

  • Median Rent: $2,501 
  • Month-Over-Month Change: +$1 
  • Year-Over-Year Change: +$1 
  • Available Rentals: 12,654

Conclusion 

New Jersey can be a great place to live in for commuters to New York City, or for those who simply want to be a part of the action on the East Coast. However, this state has the highest property tax rate and an expensive cost of living. Before moving to New Jersey, it’s a good idea to do thorough research on the market and be sure that you have enough money set aside to afford a house with prices as high as the average price tag in a New Jersey neighborhood. 

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